TAX SEASON 2024
SALT deduction proposal could deliver bigger 2024 tax refunds: who would qualify?
Legislative movements on Capitol Hill could increase the SALT deduction limit, potentially paving the way for much larger tax relief.
The state and local tax deduction (SALT) could be in line for a mjaor change that could double the amount of state taxes that taxpayers can deduct, potentially leading to larger tax refunds.
The SALT deduction plays a role in mitigating the impact of double taxation, where income is taxed at both the federal and state or local levels. It aims to prevent taxpayers from being unfairly burdened by high state and local taxes
Before the introduction of the cap, taxpayers could deduct all of their local taxes from their federal tax returns, but a 2017 rules change introduced a cap at $10,000 for individuals and $5,000 for married individuals filing separately. Individuals in high-tax states have since been unable to deduct as much from their local tax contributions compared to compatriots in lower-tax states.
The newest change would double this threshold to $20,000 for married filers. The House could vote on the plans this week.
“This is a pro-family tax measure that rights a wrong, and this ultimately is about fairness,” said Rep. Mike Lawler, a Republican who introduced the bill.
Who would qualify?
SALT deductions are applicable to individuals who itemize their deductions on their federal tax returns. These deductions typically include state and local income taxes, property taxes, and either sales taxes or state and local general sales taxes, but there are limitations.
Rules on SALT eligibility will not change if the bill is passed in Congress.